Correlation Between Medistim ASA and Pryme BV
Can any of the company-specific risk be diversified away by investing in both Medistim ASA and Pryme BV at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Medistim ASA and Pryme BV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medistim ASA and Pryme BV, you can compare the effects of market volatilities on Medistim ASA and Pryme BV and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Medistim ASA with a short position of Pryme BV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medistim ASA and Pryme BV.
Diversification Opportunities for Medistim ASA and Pryme BV
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Medistim and Pryme is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Medistim ASA and Pryme BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pryme BV and Medistim ASA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Medistim ASA are associated (or correlated) with Pryme BV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pryme BV has no effect on the direction of Medistim ASA i.e., Medistim ASA and Pryme BV go up and down completely randomly.
Pair Corralation between Medistim ASA and Pryme BV
Assuming the 90 days trading horizon Medistim ASA is expected to generate 0.38 times more return on investment than Pryme BV. However, Medistim ASA is 2.61 times less risky than Pryme BV. It trades about -0.05 of its potential returns per unit of risk. Pryme BV is currently generating about -0.16 per unit of risk. If you would invest 16,000 in Medistim ASA on September 1, 2024 and sell it today you would lose (800.00) from holding Medistim ASA or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medistim ASA vs. Pryme BV
Performance |
| Timeline |
| Medistim ASA |
| Pryme BV |
Medistim ASA and Pryme BV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medistim ASA and Pryme BV
The main advantage of trading using opposite Medistim ASA and Pryme BV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medistim ASA position performs unexpectedly, Pryme BV can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Pryme BV will offset losses from the drop in Pryme BV's long position.| Medistim ASA vs. Lifecare AS | Medistim ASA vs. Elkem ASA | Medistim ASA vs. Integrated Wind Solutions | Medistim ASA vs. Vow ASA |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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